Help avoid a lawsuit with a pre-emptive strike

You are sifting through your daily mail or e-mail and open up a demand letter from the attorney for your customer or vendor. You haven't read the contract since you signed it a year ago, if then, but now there is a dispute and the threat of litigation. Complicating the matter is that suit is being threatened outside your county or, even worse, outside your state. Chances are, you may even have a claim or two of your own, but the thought of paying an attorney who you don't know in another jurisdiction is already making you think of settlement.

Before you push the panic button or, worse, fire the manager who signed the agreement, consider that there are multiple locations to file most lawsuits. Often times, cases are won or lost by choosing the right venue; starting the fight on your own turf shows the other side that you are not backing down. A pre-emptive filing in your own back yard will immediately put the other side on the defensive and force them to incur the expense of retaining local counsel.

However, filing suit is not enough; you need to serve the complaint before the other party does. The court will serve a complaint by certified mail, which generally takes 10 to 14 days, and can be refused by the defendant. A better approach, both from gaining a psychological advantage and getting the case in your own back yard, is to hire a process server. Most process servers will file the complaint, obtain the paperwork from the court, and drive out to the defendant's location the same day. Even better, many out-of-state companies use a corporate statutory agent service, so the process server simply has to drive from the courthouse to some nearby location and serve the complaint. The cost is modest and the pay-off, both financially and strategically, can be significant. Imagine being the lawyer who sent the demand letter trying to explain to his client that, while he was sitting back and waiting for a response, the case now must be defended in another jurisdiction.

How well does this strategy work? Quite well, in many cases. For example, our litigation team recently obtained a favorable resolution by filing suit in a state court in Ohio after the opposing party threatened a federal lawsuit in Minnesota. The opposing party in this contract dispute settled for a fraction of what it was owed rather than having to defend the case in Ohio.